Construction of Housing Price Index for Second-Generation New Towns and Nearby Areas in Seoul Metropolitan Area

This paper suggests housing price index methodology to examine changes in housing prices of areas narrower than the area scope of the existing housing price index, and analyzes changes in apartment transaction prices as well as Jeonse prices of the 2nd new towns in Seoul Metropolitan area by utilizing this methodology. We control the characteristics of individual transactions, using a hedonic price model, and only price changes are indexed over a period of time. This allows to create a housing price index for areas smaller in scale than cities, counties, and districts, which are units for the existing indices. The areas of analysis comprises Seongnam Pangyo, Suwon Gwanggyo, Hwaseong Dongtan, and their nearby residential areas including Seongnam Bundang, Yongin Suji, Yongin Jukjeon, Yongin Guseong, Yongin Dongbaek, Suwon Yeongtong, Hwaseong Byeongjeom, Osan Segyo, and the old city center of Osan. The results of analysis are as follows. First, changes of price in the individual residential areas varied considerably. Second, even during the so-called period of housing price explosion after 2017, there were areas where price changes were not significant or even price decreased depending on the residential areas. Third, jeonse prices rose in all the areas during periods of falling interest rates. Fourth, the rise of jeonse prices followed the rise of the transaction prices when housing market recovered in 2013. Finally, even among apartment complexes supplied to the same area during the same period, there is a price gap of as much as 30~40% depending on their locations.